Policy 730 - Trust for Other Post Employment Benefits

The purpose of this policy is to establish guidelines for the investment of other post-employment benefits (OPEB).

The policy of this school district is to comply with all state laws relating to OPEB investments and to guarantee that investments meet certain primary criteria.

A. The funds of the school district shall be deposited or invested in accordance with this policy, Minn. Stat. Ch. 118A, Ch 471.6175, and Ch 356. and any other applicable law or written administrative procedures.

B. The school district shall form an irrevocable trust to hold, manage, and expend assets reserved for “other post-employment benefits” as defined as benefits for health care, dental care, and life insurance paid to or on behalf of employees after they retire from service with the district. “Other post-employment benefits” does not include pension savings plans or severance pay. The terms of the trust must comply with the requirements of the Government Accounting Standards Board regarding other post-employment benefits.

C. The trust shall be overseen by the finance and operations committee of the board. The district shall select a trust administrator, as defined in MN Statute 471.6175 sub. 3, and may select one or more money managers (financial firm that manages the district portfolio) to advise the trust
administrator and the School Board on prudent investment of assets. The finance and operations committee shall determine investment guidelines and recommend investment allocations to the trust administrator.

The assets of an other postemployment benefits (OPEB) trust or trust account established pursuant to Minn. Stat. § 471.6175 to pay postemployment benefits to employees or officers after their termination of service, with a trust administrator other than the Public Employees Retirement Association, may be invested in instruments authorized under Minn. Stat. Ch. 118A or § 356. Investment of funds in an OPEB trust account under Minn. Stat. § 356, as well as the overall asset allocation strategy for OPEB investments, shall be governed by an OPEB Investment Policy Statement (IPS) developed between the investment officer, as designated in Policy 705-Investments, and the trust administrator.

A. Limitations on instruments, diversification, and maturity scheduling shall depend on whether the funds being invested are considered short-term or long-term funds. All funds shall normally be considered short-term except those reserved for building construction projects or specific future projects and any unreserved funds used to provide financial-related managerial flexibility for future fiscal years.

B. The school district shall diversify its investments to avoid incurring unreasonable risks inherent in over-investing in specific instruments, individual financial institutions or maturities.

1. The investment officer shall prepare and present a table to the school board for review and approval. The table shall specify the maximum percentage of the school district’s investment portfolio that may be invested in a single type of investment instrument, such as U.S. Treasury Obligations, certificates of deposit, repurchase agreements, banker’s acceptances, commercial paper, etc. The OPEB policy statement shall be attached as an exhibit to this policy and shall be incorporated herein by reference.

2. The investment officer shall prepare and present to the school board for its review and approval a recommendation as to the maximum percentage of the total investment portfolio that may be held in any one depository. The approved recommendation shall be attached as an exhibit or part of an exhibit to this policy and shall be incorporated herein by reference.

3. Investment maturities shall be scheduled to coincide with projected school district cash flow needs, taking into account large routine or scheduled expenditures, as well as anticipated receipt dates of anticipated revenues. Maturities for short-term and long-term investments shall be timed according to anticipated need. Within these parameters, portfolio maturities shall be staggered to avoid undue concentration of assets and a specific maturity sector. The maturities selected shall provide for stability of income and reasonable liquidity.

A. The school district shall maintain a list of the financial institutions that are approved for investment purposes.

B. Prior to completing an initial transaction with a broker, the school district shall provide to the broker a written statement of investment restrictions which shall include a provision that all future investments are to be made in accordance with Minnesota statutes governing the investment of public funds. The broker must annually acknowledge receipt of the statement of investment restrictions and agree to handle the school district’s account in accordance with these restrictions. The school district may not enter into a transaction with a broker until the broker has provided this annual written agreement to the school district. The notification form to be used shall be that prepared by the State Auditor. A copy of this investment policy, including any amendments thereto, shall be provided to each such broker.

A. All investment securities purchased by the school district shall be held in third-party safekeeping by an institution designated as custodial agent. The custodial agent may be any Federal Reserve Bank, any bank authorized under the laws of the United States or any state to exercise
corporate trust powers, a primary reporting dealer in United States Government securities to the Federal Reserve Bank of New York, or a securities broker-dealer defined in Minn. Stat. § 118A. The institution or dealer shall issue a safekeeping receipt to the school district listing the specific instrument, the name of the issuer, the name in which the security is held, the rate, the maturity, serial numbers and other distinguishing marks, and other pertinent information.

B. Deposit-type securities shall be collateralized as required by Minn. Stat. § 118A.03 for any amount exceeding FDIC, SAIF, BIF, FCUA, or other federal deposit coverage.

C. Repurchase agreements shall be secured by the physical delivery or transfer against payment of the collateral securities to a third party or custodial agent for safekeeping. The school district may accept a safekeeping receipt instead of requiring physical delivery or third-party safekeeping of collateral on overnight repurchase agreements of less than $1,000,000.

A. The investment officer shall generate daily and monthly transaction reports for management purposes. In addition, the trust board shall be provided a quarterly report that shall include data on investment instruments being held as well as any narrative necessary for clarification.

B. The investment officer shall prepare and submit to the trust board a quarterly investment report that summarizes recent market conditions, economic developments, and anticipated investment conditions. The report shall summarize the investment strategies employed in the most
recent quarter and describe the investment portfolio in terms of investment securities, maturities, risk characteristics, and other features. The report shall summarize changes in investment instruments and asset allocation strategy approved by the investment officer for an OPEB trust in the most recent quarter. The report shall explain the quarter’s total investment return and compare the return with budgetary expectations. The report shall include an appendix that discloses all transactions during the past quarter. Each quarterly report shall indicate any areas of policy concern and suggested or planned revisions of investment strategies. Copies of the report shall be provided to the school district’s auditor.

C. The investment officer shall prepare and submit to the school board a comprehensive annual report on the investment program and investment activity of the school district for that fiscal year.

D. If necessary, the investment officer shall establish systems and procedures to comply with applicable federal laws and regulations governing the investment of bond proceeds and funds in a debt service account for a bond issue. The record keeping system shall be reviewed annually by the independent auditor or by another party contracted or designated to review investments for arbitrage rebate or penalty calculation purposes.

The school board shall annually designate one or more official depositories for school district funds. Under the direction of the School Board, the School Board treasurer or the executive director of finance and operations of the school district may also exercise the power of the school board to designate a depository. The School Board shall be provided notice of any such designation by its next regular meeting. The school district and the depository shall each comply with the provisions of Minn. Stat. § 118A and any other applicable law, including any provisions relating to designation of a depository, qualifying institutions, depository bonds, and approval, deposit, assignment, substitution, addition, and withdrawal of collateral.

The school district may make electronic fund transfers for investments of excess funds in compliance with Minn. Stat. § 471.38.

• Minn. Stat. Ch. 118A, Ch 471.6175
• Minn. Stat. Ch. 118A, Ch 356
• Minn. Stat. § 471.6175
• Minn. Stat. § 471.38

• Adopted: July 14, 2008
• Amended: December 14, 2015
• Amended: March 31, 2023
• Last Reviewed: March 31, 2023